KR
The Kroger Co.
$58.41
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 64.4% above fair value
You pay
$58.41
Bear
$29.60
Fair
$35.52
Bull
$41.44
Bear
$29.60
-49.3%
$2.96 × 10x P/E
Fair
$35.52
-39.2%
$2.96 × 12x P/E
Bull
$41.44
-29.1%
$2.96 × 14x P/E
Adjust Assumptions
12.0x
2.96$
Key Value Driver
Normalized P/E multiple (12x base case)
Implied Market Multiple
19.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (44 analysts)
$70.50
Divergence from AlphaVal
50%
Summary
Applying a 12x P/E to adjusted EPS of $2.96, the base-case value is $35.52 per share.
Warnings
The company's reported profits differ from official accounting profits by 92%. Check what costs are being left out of the adjusted number.
The company pays out 96% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $70.50 (from 44 analysts). Our estimate is 50% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples